Introduction

Welcome to Insurance-Based Products, the unit where you'll learn how insurance companies package investment and protection features into annuities and life insurance policies, and which of these products cross the line into securities.

Exam Weight: Part of 17 questions

What You'll Learn

In this unit, you'll cover:

• Annuities: Fixed, variable, and equity-indexed annuities; how they work, who bears the investment risk, tax treatment, surrender charges, and payout options
• Life Insurance: Term, whole, universal, variable, and variable universal life; which build cash value, which are securities, and why it matters

Why This Matters

Insurance-based products show up regularly on the Series 66 exam, and the questions almost always come down to one critical distinction: who bears the investment risk? If the contract owner selects subaccounts and bears the risk, the product is a security. If the insurance company guarantees a return and bears the risk, it is not. Master this distinction and you'll answer most insurance questions correctly.

Let's start with annuities, the more frequently tested of the two topics.